Decrease in Global Venture Capital Investments From Previous Quarter

Analysis

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According to data from Crunchbase, the second quarter of 2023 showed a significant decrease in global venture capital investments (VCI), recording a drop of 18% from the previous quarter to settle at USD 65 billion, and his decline is especially noticeable when compared to the funding in Q2 2022, where investors funneled an impressive USD 127 bln into startups, resulting in a significant 49% decrease.

The first quarter of 2023 was significantly influenced by investments in OpenAI and Stripe, investments of USD 10 bln and USD 6.5 bln, respectively. Accounting for these momentous deals within the first quarter, statistics predicted a remarkable 14% quarter-over-quarter rise in funding for the second quarter of 2023, rather than the decrease it currently portrays.

Annually, deal volumes have shrunk by 37%, with each investment stage experiencing a drop of over a third. In the last quarter, over 6,000 startups managed to secure funding, marking a noticeable dip from the over 9,500 startups that achieved this during the same period in the prior year.

Building on KPMG’s findings, there is an assumption that European investments followed a cautious approach, with USD 13.5 bln funneled over 1861 transactions.

The spotlight in Europe during Q2 2023 was on AI and deep learning technologies, such as the U.K.-based Quantexa, which garnered a substantial investment of USD 129 million during this period, thereby earning unicorn status.

VCIs in Europe continue to exercise caution in their investment decisions. Current market dynamics and worries about future fundraising opportunities have contributed to this cautious stance. Additionally, it's projected that exit activity will be less vibrant, as both startups and investors opt for a more patient approach, awaiting better market sentiment.

During Q2 2023, VCIs in CEE experienced a minor decrease, with investments slightly surpassing EUR 560 mln, a slight drop from Q1 2023 when startups landed more than EUR 600 mln. The trajectory signals a noticeable deceleration in the CEE VC market, which is nowhere close to the resilience it showed back in H1 2022, and illustrates a slight misalignment between CEE and the Western markets.

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